Interim
Joint Committee on State Government

Minutes
of the<MeetNo1>1st Meeting

of the 2002 Interim

<MeetMDY1>September 17, 2002

The<MeetNo2>1st meeting of the Elections,
Constitutional Amendments, and Intergovernmental Affairs Task Force of the
Interim Joint Committee on State Government was held on<Day>Tuesday,<MeetMDY2>September
17, 2002, at<MeetTime>1:00 PM, in<Room>Room 131 of the Capitol Annex. Representative
Adrian Arnold, Chair, called the meeting to order, and the secretary called the
roll.

Representative Arnold stated that the Task Force was
approved for three interim meetings; September, October and November. The
agenda consisted of two constitutional amendments that will be on the ballot in
November. (1) The Family Courts amendment that was passed in the 2001 session;
and (2) Corporations amendment that was passed in the last session.

Representative Arnold noted that the General Assembly may
place four constitutional amendments on the ballot at a time, but usually the
General Assembly chooses to only place two on the ballot at a time. Out of 75
proposed constitutional amendments, 37 have been passed.

First on the agenda was a presentation on a proposed Family
Court Constitutional Amendment. Carla Kreitman, Manager of the Department of
Family Courts, Administrative Office of the Courts reported on the proposed
amendment to the Kentucky Constitution that would insure the continued
operation of the family courts in existence 2001 RS Senate Bill 58 is the
vehicle which placed this constitutional issue on the ballot this coming
November. It had favorable passage by 132 members of the General Assembly.

Ms. Kreitman further provided a progress report on the
family court sites in the commonwealth. The foundational goal of the family
court is to provide protection to children and families. An advisory committee
consisting of members of the bar, heads of social service agencies, various
advocacy groups, county attorneys and commonwealth attorneys, provided input
into restructuring more efficient judicial systems.

There are presently 14 family court projects in Kentucky
impacting 26 out of 120 counties. Three of those sites became operational this
spring; the others have been operational two, three and in some cases over 10
years. There were a total of 36,172 cases filed in family court in fiscal year
2002, which represents 23,000 district court cases, and 13,100 circuit court
cases.

Two attorneys challenged the constitutionality of family
court in 1993. The court held that our Kentucky constitution recognizes only
four levels in the state court system; the district and circuit courts, which
are trial courts, and the appellate courts, which are the Court of Appeals and
the Supreme Court. The question as it will appear on the ballot in November
states: "Are you in favor of family courts in Kentucky by amending the
Kentucky constitution to allow the Supreme Court to designate a division of
circuit court as a family court?" A political issues committee, The Family
Courts for Kentucky, was formed to promote the passage of this amendment and
has begun raising awareness of the amendment among voters.

Ms. Kreitman reported that she was aware of no organized
opposition to the amendment. The amendment has the endorsement of the Circuit
Judges Association, the District Judges Association, and the Circuit Clerks'
Association as well as numerous other endorsements obtained by the political
issues committee. The amendment will ensure the continued successful operation
of the family courts that are currently operating.

Ms. Kreitman said that passage of this amendment will also
do away with domestic relations commissioners in those areas that have a family
court, which will provide more direct access to the justice system as well as
eliminate an expensive barrier to court access for some families in some
counties.

Passage of the amendment does not automatically ensure that
each county will receive a family court. It does, however, pave the way for
future growth. It also serves to preserve the courts now in operation and which
are already budgeted. For future growth, the Supreme Court would still need to
certify the need for additional judgeships and the General Assembly would still
need to appropriate the necessary funds to add whatever resources are necessary
for a family court to function as both a court of law and a social services
delivery system.

Representative Arnold made the comment that he would support
family courts. He said there have been newspaper reports of the large workloads
for family court judges, stating that they were susceptible to burnout. He
asked if whether they would be allowed to switch roles occasionally with judges
from other courts. Ms. Krietman replied that the passage of the amendment
would make family courts a division of the circuit court, thereby, making it
conceivable that judges could rotate in and out of the family court position.
The average caseload for a family court judge is 1,006 cases per year, which is
a significant caseload for such demanding types of cases.

Representative Arnold said the second constitutional
amendment that was passed concerned corporations. In 1987, the Special
Commission on Constitutional Review was created, which made recommendations on
constitutional amendments that should be considered by the General Assembly.
One of the Special Commission's recommendations was on corporations, and this
is the proposed amendment on the ballot this November.

Carl Breeding, Associated Industries of Kentucky addressed
the proposed constitutional amendment. Mr. Breeding serves as General Counsel
and as treasurer of a political issues committee that has been established to
work on the corporation's constitutional amendment. That committee is known as
Kentuckians for Employment and Economic Progress (KEEP).

Mr. Breeding said the question on the ballot will be:
"Are you in favor of permitting the General Assembly to provide, by
general law, for the formation, organization and regulation of corporations by
repealing certain sections of the constitution of Kentucky relating to
corporations?"

He said the purpose of the corporations constitutional
amendment is to repeal outdated sections of Kentucky's constitution to improve
Kentucky's ability to keep heathly businesses and the jobs they create in the
Commonwealth of Kentucky and to create good jobs in Kentucky. This amendment
would also allow Kentucky businesses to compete on equal terms with neighboring
states, as well as eliminate outdated restrictions that affect both large and
small businesses.

Mr. Breeding stated that the amendment should be supported
in an effort to improve Kentucky's economic competitiveness. It allows Kentucky
voters to say "yes" to promote a more positive environment for
attracting growing companies with good jobs. Kentucky lags behind every
neighboring state except West Virginia in job attraction. Site selectors and
other decision-makers evaluate states in part by the number and quality of
companies they have, and Kentucky's statistics show that Kentucky is not
considered an attractive location by growing companies. Six of the seven
largest companies in Kentucky are incorporated in other states.

Mr. Breeding stated that our constitution hinders both large
and small companies' ability to grow by specifying how directors are elected,
by restricting how stocks and bonds are distributed in ways that can cost
companies income that could be used to create growth and jobs. It limits land
holdings to no more than five years. Small businesses can be hurt the most
because they cannot give shares or stock to family or employees. Presently,
owners are forced to give up land to the state after five years if it is not
used as it was originally intended.

Representative Arnold asked about the positions of other
groups. Mr. Breeding replied that the committee does not anticipate any groups
or associations to be in opposition.

Representative Lindsay stated that the Judiciary Committee
would be meeting in November to discuss the laws necessary to implement if this
amendment passes. He noted that Kentucky has adopted the Model Business
Corporation Act.

Representative Lindsay asked what changes were envisioned to
the statutes if this amendment passes. Cynthia Young, of Wyatt, Tarrant and
Combs replied that the constitutional amendment will empower the General Assembly
to completely regulate corporations, their shareholders and members, thereby
giving the General Assembly full authority to adopt any legislation they feel
is appropriate in addressing responsibilities, obligations and liabilities.
With respect to specific provisions that will be deleted from the model act in
response to any changes in the Constitution, those were included in SB 121,
which was passed in 2002 and parts of which will become effective upon passage
of the constitutional amendment.

Representative Arnold asked if anyone in the audience wished
to speak about the proposed amendments. Ms. Mary Hammond stated that she was
aware of some chapters of the AFL-CIO being opposed to the corporations
amendment, but she was not specifically a representative of that group. Several
members of the committee expressed that staff contact the AFL-CIO to provide an
opportunity for them to offer their views on the corporation amendment at the
next meeting.

Representative Arnold reminded the committee that the next
meetings would be October 15 and November 19. There being no further business,
the meeting adjourned at 2:15 PM.